The IT sector’s cautious growth plans are affecting the absorption of office space in the real estate sector.
During the first half of 2012, total absorption of approximately 13.4 million square feet (sq ft) of office space registered a decline of 21 per cent compared to 16.9 million sq ft during the same period last year, according to the latest Cushman & Wakefield report.
Bangalore witnessed the highest absorption in the first half of 2012 at 3.01 million sq ft followed by Mumbai with 2.78 million sq ft. On the other hand, the National Capital Region (NCR) saw the highest decline of 53 per cent in absorption during the first half of the year compared to the same period last year.
NCR recorded absorption of 1.35 million sq ft vis-a-vis 2.9 milion sq ft in the first half of 2011. Bangalore also saw a significant slowdown of nearly 46 per cent over the first half last year even though it registered the highest quantum of absorption, while Chennai recorded a slowdown of 12 per cent.
This slowdown in demand is due to cautious expansion plans from IT sector as majority of demand in these cities is driven by the sector. However, Mumbai (19 per cent) and Hyderabad (5 per cent) bucked the trend and showed an increase in absorption compared to the same period last year.
The total office space supply registered in first half of 2012 was 16.2 million sq ft, reduced by 8 per cent over the same period last year. Bangalore witnessed the highest addition of office space supply which was over 4.1 million sq ft followed by Mumbai which witnessed 3.6 million sq ft.